Panel Asks Webster to Explain FBI's 'Botched' Probe of Donovan

ByGeorge Lardner Jr.

May 2, 1982

The chairman of the Senate Labor Committee, Sen. Orrin G. Hatch (R-Utah), expressed chagrin yesterday at the FBI's "botched" investigation of Secretary of Labor Raymond J. Donovan. Hatch said the committee has asked for a full report from FBI Director William H. Webster on what went wrong.

In a special report made public this weekend, the committee disclosed that the FBI had obtained a number of incriminating allegations about Donovan last year, before his nomination was approved by the Senate, but kept them buried in its files for more than a year.

"I am darned upset at the FBI," Hatch said a telephone interview from Utah. He said he saw "little or no excuse" for the foulups.

The damaging reports were not unearthed until this spring, and then it was at the prodding of special prosecutor Leon Silverman, whose investigators discovered one of them in the files of the FBI's field office in Newark, N.J.

Five other reports were turned up as a result of a special search of the files of every FBI field office in the country. Such a search had not been undertaken before, despite the controversy last year over Donovan's nomination.

A spokesman for Webster said yesterday that the FBI director "was concerned, of course" but saw "no indication of purposeful deception or control of information."

"There was apparently some slippage here," said FBI spokesman Roger Young. But he took exception to suggestions from some quarters that FBI officials might have lied to Hatch's committee about the Donovan case.

"I think that is terribly unfair," Young said. "People don't recognize the complexity of these things."

One of the belatedly discovered reports, from Philadelphia, appeared to contradict Donovan's testimony before the Senate Labor Committee last year that his New Jersey company, Schiavone Construction, "had never made a payoff."

According to the Philadelphia report, an informer told authorities there on Sept. 22, 1978, that a Pennsylvania highway official had received $3,000 in lumber for personal use from a Schiavone Construction employe.

"State investigation," the FBI told Hatch's committee two weeks ago, "resulted in identification of all parties involved and discharge of the state employe."

Evidently because the incident involved an interstate highway project, the FBI conducted its own investigation, but the U.S. attorney's office decided not to prosecute.

The FBI says that "no involvement of Raymond Donovan nor any corporate officer was discovered" in the Pennsylvania incident. Donovan, however, appeared to be speaking for his entire company when he assured Hatch's committee at a confirmation hearing on Jan. 12, 1981, that "We have never been extorted; we have never made a payoff."

Hatch stressed that most of the long-ignored FBI reports consisted of "unsubstantiated allegations," but he volunteered the observation that "in the case of the Pennsylvania lumber, there's hard proof there."

Donovan has declined to make any public comment, but Hatch said he spoke to the labor secretary Thursday and Donovan "claims he didn't know about it the Pennsylvania case . That one was not unsubstantiated, but he says he didn't know."

As for the other heretofore undisclosed reports, Hatch said that Donovan dismissed them as "the same type of scurrilous accusations as before." Hatch said he felt strongly that Donovan should have had an opportunity to rebut them at the confirmation hearings and "still deserves the benefit of the doubt now."

"But if they're true," Hatch added, "he's in serious trouble."

A New York FBI field office report, which apparently never reached Washington, came from an informer who claimed to an agent on Jan. 11, 1981--before Donovan's confirmation hearings--that the secretary-designate had had business contacts with a number of individuals "of questionable reputation."

This informer, whose reliability, sources say, was not rated in the report, said, for instance, that "Cornelius Gallagher . . . was at one time on the Schiavone payroll."

That could be a reference to former congressman Cornelius Gallagher (D-N.J.), who was a commissioner and then vice chairman of the New Jersey Turnpike Authority between 1955 and 1958, before his election to Congress. Donovan at the time was a bond representative with a Newark insurance firm from 1955 to 1958, before joining Schiavone Construction.

Gallagher, who is now "in the private sector" after serving a 17-month prison term in the early 1970s for tax evasion, said yesterday that "Unequivocally I was never on the Schiavone payroll." But he said he couldn't speak for the five other Cornelius Gallaghers who, he said, live in Bayonne.

Donovan and his family "lived a couple of blocks away from us, growing up," Gallagher said, but he declared emphatically, "I have had no more than two or three conversations with Ray Donovan in my life."

The New York informer's allegations, in any case, never reached FBI headquarters in Washington, the bureau says, because the supervisor in New York who wrote that report inexplicably "directed the communication to the file and today is unable to recall any dissemination" of it.

More disturbing to committee members is the report of a Newark informer on Jan. 27, 1981, which seemed at least partly to corroborate claims of Donovan's chief accuser at the time, Ralph Picardo, about payoffs for a now dead New Jersey mobster and labor racketeer named Salvatore Briguglio.

Picardo said that in the 1960s, he periodically delivered fake invoices to the offices of Schiavone Construction and picked up $500 checks for Briguglio in return from "Ray" Donovan.

Donovan denied that flatly at a Jan. 27 hearing of Hatch's committee and two FBI officials, Mullen and the man in charge of the FBI's background investigation, Anthony Adamski, told the committee at the same session that Picardo's account could not be corroborated.

That same day, however, the Newark informer told his FBI contact there that "Briguglio received payoffs from Donovan" in return for inside information on competing construction company bids that Briguglio was able to obtain from contacts in New Jersey state and municipal agencies. FBI agents in Newark say the information was telephoned immediately to Adamski in Washington, on Jan. 27.

The FBI, it appears, did pass on one other item it got from the Newark informer to a Democratic minority staff member, Walter Sheridan, but made no mention of the details that seemed to corroborate Picardo.

Instead, on Jan. 29, Mullen assured Hatch by letter that the FBI's investigation of Donovan had been "thorough and complete" and that it "surfaced no information which would reflect unfavorably upon Mr. Donovan."

The Senate Labor Committee endorsed Donovan's nomination the same day, Jan. 29, 1981, and the next week, on Feb. 3, he was confirmed by the Senate.

Mullen continued to stand by the investigation. The FBI executive assistant director told Hatch and the committee's ranking minority member, Sen. Edward M. Kennedy (D-Mass.), once again on March 23, weeks after Donovan was sworn in, that the FBI still had received "no additional relevant information."

Hatch yesterday expressed some exasperation at Adamski. "I remember my people telling Adamski, 'Don't withhold anything; if you hear of anything else, bring it to us, or if you don't want to bring it to us, bring it to the chairman,' " Hatch recalled. "He said he would. . . . I'm darn upset this could happen in a Cabinet-level situation."